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The Infrastructure Finance Unit (TIFU) £1-2 billion ‘fund’ established in March 2009 –To help projects reach financial close –Arms-length unit within HM Treasury –Credit committee and other governance Loan on commercial market terms –Pricing –Voting rights Access via public sector financial adviser and PFU sign off –Funding not available or –Not available on appropriate terms Greater Manchester Waste deal closed with TIFU loan of £120mm

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PPP model will survive but alternatives are being explored Liquidity is returning, but recapitalisation will take time Capital markets investors are looking for a way back into the sector –Unwrapped bonds –Subordinated debt funds –Senior debt funds Pricing is unlikely to revert to 2007 levels and some projects may become unaffordable without innovative solutions What does this mean in the longer term?

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Current system challenges 1 Need for longer term vision for national infrastructure requirement Avoid investment occurring in an ad-hoc way. Avoid responsibilities and accountabilities being silo-ed Need for better knowledge of vulnerabilities from interdependencies. Better resilience against systemic failure New challenges: e.g. climate and socio-demographic changes. Investment capital and supply chains are limited and competed for globally. 1 Council for Science and Technology report June 2009

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IUK - Rationale Establish a body with a clear responsibility for developing and supporting delivery of an infrastructure strategy for the UK. Bring together TIFU, HMT’s PPP policy team, the IUK set up team and PUK’s core project/programme delivery capability. Provide a focal point for infrastructure investors and industry, able to tackle cross-cutting policy issues. Help ensure value for money for Government investment in a fiscally constrained environment. Achieve efficiencies by reducing interfaces whilst retaining professional delivery capability and deploying it more effectively. Continue to address the commercial skills gap in Government.

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Structure and leadership Part of Treasury but with a separate identity and presence in the market. Chaired by Paul Skinner (Chairman, Rio Tinto, ) and led by James Stewart. Supported by an Advisory Council comprising independent experts and Permanent Secretaries from relevant Departments. Reporting to Lord Davies and Treasury Ministers.